Although the April 15, 2020 tax deadline was extended to July 15, 2020, there are many good reasons to file income tax returns now for 2019, many of which will put money in your pocket now.

To Qualify for Stimulus Payments– We have found many instances where filing 2019 income tax returns qualified taxpayers to receive stimulus payments:

• If, in 2018, a taxpayer was considered a dependent of another and in 2019 they were no longer dependents, for example college students or young adults
• If income was too high in 2018 but then was low enough in 2019 to qualify for a stimulus payment based upon 2019 income tax returns
• If tax returns were not filed in 2018 – either late filers or income did not result in a filing requirement

To Obtain Refunds – If you are expecting a refund upon filing your 2019 income tax returns and you need the money, the taxing authorities are still processing tax returns and issuing refunds quickly for returns that are e-filed.

Net Operating Losses (NOLs) – The CARES Act included legislation that changed the tax treatment of NOLs. Previously, NOLs generated in 2018 and 2019 could only be carried forward. Now NOLs that are generated in 2019 can be carried back 5 years, which creates an opportunity to utilize these losses to offset income and taxes from as far back as 2013 and can, therefore, result in material refunds to those who qualify.

By filing 2019 tax returns, as soon as possible, to determine if a NOL can be generated is a very good reason to file 2019 tax returns now. Corporate and Individual Taxpayers need to have an experienced CPA to examine and recommend the best possible utilization/treatment by reviewing prior years’ tax returns and considering 2020 and future outlook.

To Stay in Compliance with Loan Covenants – For those businesses who obtained PPP or EIDL loans as well as other pre-COVID-19 loans, the current financial climate will result in loans and lines of credit being scrutinized more thoroughly and may also result in loans and lines being called or closed per fine print loan covenants. By providing accurate and timely tax returns that are in many cases required for loan renewals and financial institution requests, this is a compelling reason for preparing returns now. Tax returns will further support and may be required for loan forgiveness.

To Qualify for Mortgage or Re-Fi – With historically low interest rates on residential mortgages and commercial loans, businesses and individuals should consider opportunities to take advantage of low interest rates. Having 2019 tax returns prepared may help taxpayers qualify for loans.

For July 15, 2020 Cash Flow Planning Purposes – July 15, 2020 is not only the due date for 2019 income taxes, it is also the due date for 1^st and 2^nd quarter 2020 estimated tax payments and the 3^rd quarter 2020 is due shortly after September 15, 2020.

Filing an extension of time to file your tax returns does NOT extend the time to pay taxes owed.

Taxes are due to be paid July 15, 2020 even if an extension of time to file is granted. Neglecting to submit required tax payments will result in penalties for failing to pay timely and the accrual of interest. This is the case for both federal as well as state income tax liabilities.

To Reduce Tax Preparation Costs – By filing timely, taxpayers who typically do not have required information by April 15 to file complete and accurate tax returns, must estimate and pay taxes with extensions. By filing now, you can eliminate the need and cost of preparing a 2019 tax projections and extensions.

States Need Tax Revenues – Do Not Procrastinate – If you have been under a stay at home order, there is really no excuse to procrastinate further.

Now, more than ever, having a good CPA that can help businesses and their owners navigate the financial intricacies inherent in an ever-changing environment.